Hospices face money shortfall

Tuesday

Nov 27, 2007 at 12:04 AMNov 27, 2007 at 3:42 AM

By Kevin Sack, New York Times News Service

Camden, Ala. | Hundreds of hospice providers across the country are facing the catastrophic financial consequence of what would otherwise seem a positive development: their patients are living longer than expected.Over the last eight years, the refusal of patients to die according to actuarial schedules has led the federal government to demand that hospices exceeding reimbursement limits repay hundreds of millions of dollars to Medicare.The charges are assessed retrospectively, so in most cases the money has long since been spent on salaries, medicine and supplies. After absorbing huge assessments for several years, often by borrowing at high rates, a number of hospice providers are bracing for a new round that they fear may shut their doors.One is Hometown Hospice Inc., which has been providing care since 2003 to some of the most destitute residents of Wilcox County, the poorest place in Alabama.The locally owned, for-profit agency, which serves about 60 patients, mostly in their homes, had to repay the government $900,000, or 27 percent of its revenues, from its first two years of operation, said Tanya O. Walker-Butts, a co-owner.Hometown paid its first assessment with a bank loan. When the bank declined credit for the second year, the hospice structured a five-year payment plan with the Centers for Medicare and Medicaid Services, the federal agency that administers the program, at 12.5 percent interest.The next bill is expected any day. "If they hit us with a number in the several hundred-thousand range, I just don't see how we can survive," said Gaines C. McCorquodale, Hometown's other owner.In the early days of the Medicare hospice benefit, which was designed for those with less than six months to live, nearly all patients were cancer victims, who tended to die relatively quickly.But in the last five years, hospice use has skyrocketed among patients with less predictable trajectories, like those with Alzheimer's disease and dementia. Those patients now form a majority of hospice consumers, and their average stays are far longer - 86 days for Alzheimer's patients, for instance, compared with 44 for those with lung cancer, according to the Medicare Payment Advisory Commission.The commission, which analyzes Medicare issues for Congress, recently projected that 220 hospices - about one of every 13 providers - received 2005 repayment demands totaling $166 million.In 1998, Congress removed limits on the number of days that an individual could receive Medicare hospice coverage, a move that encouraged physicians to refer terminal patients.But lawmakers did not remove a cap on the aggregate amount that hospice providers could be reimbursed each year, a measure designed to contain the program's cost. A hospice's total annual reimbursement cannot exceed the product of the number of patients it serves and a per-patient allowance set by the government each year ($21,410 in 2007).